Our correspondent Andreas Frank writes:  The most effective near-term pressure that can be exerted on Russia in response to the Ukraine crisis should be financial and economic, according to a paper drafted by Chatham House – a leading think tank.

Chatham House maintained in this new report that much of President Vladimir Putins power is “predicated” upon Russia’s financial stability. Russia is also far more integrated into the world economy now than it was at the time of the escalation over Georgia in 2008.

Its growth had already faltered prior to this crisis, and the markets immediately exerted their pressure on Russia as a result of its actions, the institute observed.

The think-tank noted that freezing the assets of and denying visas to elite Russians suspected of money laundering or involved in the actions against Ukraine are likely to be measures that will influence Russian thinking and, possibly, the government’s behaviour.

The paper also noted while retaliatory Russian measures are possible and more Russians need to travel to the West than those in the West need to travel to Russia.

In addition, Chatham House urged the West to immediately ramp up its counter-narrative to the “Russian propaganda operation.” Meanwhile, the paper suggested that the statements by President Putin and other Russian leaders, and reporting by much of the Russian media, about Ukrainian refugees fleeing to Russia, violence in eastern Ukraine and there being no Russian troops in Crimea “can easily be exposed as lies.” “This should be done publicly, forcefully and immediately,” the paper proposed.

In the meantime, the institute urged the EU not go back on its commitment to the Association Agreement with Ukraine.

Furthermore, the EU should convey the message to Russian energy companies that “business as usual in not an option while intervention in the Ukraine continues,” the study concluded.   Ukraine Policy

The Knights Templar cartel, steadily diversifying into other businesses, became so successful at exporting iron ore to China that the Mexican Navy in November had to move in and take over the port in Lazaro Cardenas, a city that has become one of the gang’s main cash generators.

This steelmaking center, drug smuggling hot spot and home of a rapidly growing container port in the western state of Michoacan occupies a strategic position on the Pacific coast, making it a natural gateway for burgeoning trade with China.  Ore to China

The Bank of England (BoE) has suspended a worker after a review of its processes triggered by a probe into the suspected rigging of foreign exchange trading, it said Wednesday.  However, the British central bank stressed that to date it had found no evidence that staff colluded in the alleged manipulation of the forex market.

“It is a matter of public record that the Bank of England has been conducting an internal review into allegations that BoE officials condoned or were informed of manipulation in the foreign exchange market or the sharing of confidential client information,” it said in a statement.

“This extensive review of documents, emails and other records has to date found no evidence that BoE staff colluded in any way in manipulating the foreign exchange market or in sharing confidential client information.

“However, the Bank requires its staff to follow rigorous internal control processes and has today suspended a member of staff, pending investigation by the bank into compliance with those processes,” the BoE added.

The central bank did not name the suspended individual, adding that it “does not condone any form of market manipulation in any context whatsoever”.

The BoE has meanwhile appointed law firm Travers Smith LLP to prepare a report on the matter.  Global regulators are investigating a number of firms linked to the suspected rigging of foreign exchange trading.  British banking giants Barclays, HSBC and Royal Bank of Scotland have all confirmed that they are part of the forex market investigations.

Deutsche Bank, Swiss lender UBS and US pair Citi and JPMorgan Chase have also revealed that they are co-operating with regulators over the affair.  Some lenders have meanwhile suspended and fired traders while investigations continue. The foreign exchange probe follows the Libor interbank interest rate-rigging scandal of 2012 that triggered heavy fines for some banks and a boardroom shake-up at Barclays.

PREVALENT MONEY LAUNDERING IN HONG KONG AND MACAU

Andreas Frank’s Conclusions:

The Survey forms part of the biennial 2014 PwC Global Economic Crime Survey on economic crime which involved more than 5,000 respondents from 95 countries worldwide.

Money laundering is more prevalent in Hong Kong and Macau than in most parts of the world, with rates far above the global average, according to an economic crime survey by PwC. In Asia, Hong Kong has the highest reported rate of money laundering and the ninth highest globally.

A poll by the accounting firm found 37 per cent of companies in Hong Kong and Macau, mainly banks and casinos, had experienced money laundering in the past two years. That compared with a global average of 11 per cent, the Asia-Pacific average of 11 per cent, Singapore’s 5 per cent and mainland China’s 4 per cent.

Hong Kong had the highest reported rate of money laundering in Asia and the ninth highest globally, behind Britain, South Africa, the Czech Republic, Russia, Zambia, Australia, Kenya and Ukraine.

PwC polled 5,128 company executives from 95 countries and territories, including 116 respondents in Hong Kong and Macau, of whom 49 per cent worked for listed companies.

It was the first time the survey, which began in 2001, took a substantive look at money laundering in Hong Kong and Macau.

“The concentration of financial services in Hong Kong and gaming in Macau drives the significance of money laundering in the local marketplace,” said John Donker, the lead PwC partner in forensic services for China and Hong Kong.

“The No1 concern found among financial services companies globally is money laundering. In Hong Kong, it is one of the top concerns.”

PwC’s poll found 27 per cent of financial services companies globally had experienced money laundering.

On Monday, a Hong Kong court found Carson Yeung Ka-sing, owner of English soccer club Birmingham City, guilty of laundering HK$721 million through Hong Kong bank accounts.

This case was a more substantive target prosecuted under the recent money laundering legislation. “It is important that targets are carefully selected to make sure the big fish, not the minnows, are selected”, Steve Vickers, chief executive of Steve Vickers Associates, a Hong Kong risk consultancy said.

The two previous major cases of money laundering in Hong Kong involved an elderly woman and a young man, and both of them received prison terms, Vickers noted.

A new law against money laundering and terrorist financing took effect in Hong Kong in 2012. Courts convicted 140 people of money laundering last year, 166 in 2012 and 246 in 2011. The government recovered HK$639.74 million of laundered money last year, HK$23.6 million in 2012 and HK$1.6 billion in 2011.